Connecticut Bankruptcy Law Blog

If you are like many people in Connecticut, you automatically assume that in a bankruptcy, some of your assets might be lost. This may happen if you file for a Chapter 7 bankruptcy but there is another type of consumer bankruptcy that may provide greater protection for your home, vehicle and other assets. That is the Chapter 13 bankruptcy.

As explained by the U.S. Courts, debts are not automatically discharged in a Chapter 13 bankruptcy the way they are in a Chapter 7. Instead, debts are essentially consolidated into one monthly payment that you would make to a trustee. The trustee, in turn, distributes payments to various creditors per an agreed-upon plan. This continues over a period of 36 months on the short end to 60 months on the long end. Once the plan is complete, debts are discharged.

In the years before your parents’ death, they may have accrued significant credit card and medical debt. Like other Connecticut residents in the same situation, you may wonder if you are required to continue making payments on the debt your parents left behind.

This can be especially true if you are receiving phone calls and letters from bill collectors asking for payment. They may even state that you are responsible for repaying your parents debt, which is understandably concerning. As NerdWallet explains, heirs do not legally inherit their parents’ debts, but creditors are not without recourse. Before you and the other beneficiaries receive an inheritance, your parents’ assets will be used to repay any outstanding debt. The family home, vehicles and other property may be liquidated for this purpose and distributed to creditors.

Missing mortgage payments and facing foreclosure in Connecticut is a serious financial situation, and you may not know where to turn for help. Unfortunately, there are unscrupulous people out there who view your misfortune as an opportunity to profit from your pain. They may offer you ways out of your financial difficulty that may seem too good to be true, and according to FindLaw, that is because they are usually scams designed to cheat you out of your home by taking advantage of your desperation. 

In particular, be wary of financial counseling agencies. Some of these are legitimate and offer services such as helping you to negotiate payment plans with creditors. However, others are scams and will charge you a fee for services they will never perform on your behalf. Before you pay any money to or sign any agreement with a counseling agency, be sure to research it to ensure it is reputable and trustworthy. 

When you are having severe financial difficulties, possibly including the threat of foreclosure, in Connecticut, it can feel like you are drowning. An offer of help paying off your debts and preventing foreclosure may seem like a lifeline. Unfortunately, foreclosure rescue scams are prevalent, and those who run them are attempting to take advantage of your panic and desperation in order to make money off you. If you fall for one of these scams, you may end up in even worse financial trouble than you were in to begin with. 

People who run foreclosure rescue scams are adept at making the offer sound like the solution to all your problems, and it can be easy to fall for their tricks. However, if you keep a cool head and look out for warning signs that the deal may be too good to be true, you can avoid becoming a victim.